First Solar awaiting China decision on subsidy

By Doug Palmer

BEIJING (BestGrowthStock) – U.S. company First Solar (FSLR.O: ), which plans to build the world’s largest solar power plant in Inner Mongolia, could hear from China in coming months the amount of subsidy it will get, the company’s president said.

“Right now, the National Energy Administration is still deliberating over those prices,” Bruce Sohn told Reuters in an interview during a U.S. clean energy trade mission last week led by U.S. Commerce Secretary Gary Locke.

The Chinese state agency “is establishing a strategy to move to a concessionary bidding process over the course of the next few months,” Sohn said.

First Solar is the world’s lowest cost producer of solar modules, a key building block of solar power systems.

Last year, the Tempe, Arizona company signed a framework agreement with the government of Ordos City in Inner Mongolia to build a 2 gigawatt solar power plant in the sun-drenched region.

Sohn said traveling with Locke was beneficial because it allowed him to sit in on meetings with China’s key energy decision makers at the NEA and the National Development and Reform Commission (NDRC), the country’s powerful economic planning agency.

The company plans to build the mammoth Ordos City facility in stages over the next decade, starting with a 30 megawatt demonstration project to show it can fulfill the needs of China’s national utility, the State Grid.

But “we have to have clarity for the price signals and the value of the electricity coming off” the project, Sohn said.

First Solar wants China to establish a “feed-in tariff,” similar to that used in Germany, to subsidize the solar power project, he said.

That would guarantee the long-term price the plant would receive for the power it generates and clarify to potential investors what returns they could expect from the project, Sohn said.

First Solar currently manufactures solar modules in Ohio, Germany and Malaysia and has just announced plans for a new facility in France.

“Until we do some additional expansion, the servicing of the Chinese market would need to come from one of those facilities,” Sohn said.

It is considering whether to build a production plant in China.

“We have ongoing evaluations of a number of different locations and certainly China has been a country where many companies have found success in manufacturing,” Sohn said.

Sohn said he was hopeful for the future of large-scale solar power plants.

“If we’re going to retard the effects of climate change and deal with the burgeoning challenges of rising temperatures, we’re going to have to do this on a massive scale and building large-scale plants really facilitates that solution,” he said.

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(Editing by Jerry Norton)

First Solar awaiting China decision on subsidy